World shares fall on credit fears

[wjfox]

FTSE is below 6,000 now...

http://newsvote.bbc.co.uk/1/shared/f...ew/default.stm

All of the markets are continuing to see heavy losses.

[Erebus555]

No chance of selling my shares now, they've been falling non-stop all week despite the FTSE doing the opposite.

[wjfox]

Oh my God...

http://news.bbc.co.uk/1/hi/business/6948916.stm

: - o

[gothicform]

you werent so bothered will when we had a similar fall as the invasion of iraq began. it took us several years to recover the market values lost by invading iraq (a little point often missed by people). things go up, things go down. in time these will be recovered.
what i dont get is why all these supposedly financial brains were stupid enough to have something like a sub-prime market existing to start with. what sort of complete and utter moron lends someone money who 1)is bankrupt 2)has no credit record 3)cannot prove their identity?

[Black Cat]

Originally Posted by gothicform

you werent so bothered will when we had a similar fall as the invasion of iraq began. it took us several years to recover the market values lost by invading iraq (a little point often missed by people). things go up, things go down. in time these will be recovered.
what i dont get is why all these supposedly financial brains were stupid enough to have something like a sub-prime market existing to start with. what sort of complete and utter moron lends someone money who 1)is bankrupt 2)has no credit record 3)cannot prove their identity?

Many of these financial brains comprise the directors of many of the world's leading financial institutions. What catches my eye the most is the huge sums of money which the ECB is throwing onto the market to dowse the damage. It seems to have spent three times as much as the US central bank suggesting that perhaps the most exposed financial institutions due to the sub prime market collapse are in the Eurozone, and not in the US!

[gothicform]

my grandfather always used to say "if you make money for the bank then good, if yuo make too much you'll be sacked." the idea was that high profits caused too much risk

[wjfox]

http://www.telegraph.co.uk/news/main...3/wciti103.xml




Citigroup calls emergency board meeting

By Damian Reece, City Editor
Last Updated: 10:47pm GMT 02/11/2007

Fears of more turmoil hitting world stock markets have grown after it emerged that Citigroup, the world's biggest bank, has called an emergency board meeting for this weekend amid concerns of escalating bad debts at the financial services giant.

Citi is seen as a bellwether for the health of the global financial system but has been rocked in recent days over concerns that its exposure to America's sub prime mortgage crisis is bigger than previously thought.

News of the Citi board meeting came after the US stockmarket closed so investors could not immediately react to the news.

There were concerns in New York that the board meeting had been called to discuss the possibility of the bank making large write downs caused by mounting bad debts. This could undermine the strength of its balance sheet.

Citi's shares have already slumped 25pc over the past three weeks after the bank unveiled a $5.9bn (£2.8 billion) write down, which is a reduction in the value of an asset because it is overvalued compared to the market.



Citi's chief executive Charles Prince


Charles Prince, Citi's chief executive, has come under mounting scrutiny over the performance of the bank and will come under pressure to resign if write downs escalate.

It follows the resignation on Wednesday of Stan O'Neal, chairman and chief executive of Merrill Lynch, after the investment bank wrote-down $7.9bn in sub-prime exposure in the third quarter.

Markets will be concerned that Citi's growing problems will spread into the economy at large as it, and other large banks, curtail lending which could prompt a slowdown in activity.

Citigroup, which globally has more than one billion customers, has operated in the UK since 1902 and currently employs more than 12,000 people here.

As well as banking, in the UK it also provides a range of commercial investment services to corporate, financial institutions and public sector clients.

British banks are also coming under pressure. Barclays saw its shares fall 6pc on Friday, again over fears of mounting bad debts.

The news comes just over a week after the Bank of England warned that the credit crunch was far from over and said that British shareholders could be its next victims.

In a downbeat report the bank warned that the UK stock market is "particularly vulnerable" to a downturn.

In its twice-yearly Financial Stability Report, the bank raised its "danger level" warning on all parts of the financial system and warned that the value of shares – known in the City as equities – is now at risk.

"The financial system is more than usually vulnerable to further adverse shocks – sourced either in recent events or from new sources, such as the equity markets or a weakening commercial property market," the report says.

The bank also signalled that first-time buyers and buy-to-let landlords are the most at risk of defaulting on their mortgages and bankruptcy in the months ahead.

"Recent investors are relying on continued house price appreciation to earn positive returns," it says. "Buy-to-let investors have often invested in new-build flats in the United Kingdom, which have experienced much lower rates of price appreciation than houses."

[jrb]

Europe and the Middle East are pumping money into America to keep it afloat, while America is pumping money into the arms industry to pump bullets into the rest of the world. Hmmm.

[gothicform]

basically yeah lol. the americans are spending more in iraq than the possible total worst case scenario for their bad debts.

[tayser]

Sterling & Aussie dollar have certainly restarted their raping of Uncle Sam's Dollar:





And I completely agree, the whole idea of knowingly lending money to maggots who are never going to be able to pay the loans is fundamentally fucked sideways.

[gothicform]

good news for us is we get to buy their fucked banks cheap wonder which ones our banks will pick up on the cheap over the coming years?

[tayser]

it's the Canuckers which are exploiting that the most.

lucky fuckers have past parity now. We're not far behind though Christmas shopping online in the US is looking better by the day

[Starslight]

If I had spare cash I would still be shorting the dollar like there was no tomorrow, its still got a long way to fall in my opinion, despite the recent good non-farm payrolls (and we all know how reliable those figures are) I think the economy and thus their currency is headed for the drain. The trick is for the rest of the world not to follow it, I think we are about to see in the theory of 'decoupling' is true.

[Assurbanipal]

The worst crisis I've seen in 30 years


The latest financial downturn is the final nail in the coffin of the conservative free-market world-view

Will Hutton
Sunday November 4, 2007
The Observer

I have been following the financial markets for more than 30 years. Crises have come and gone, but the one unfolding since August and which intensified last week is the most serious. It is not just that its impact is cascading around the world because of the new interconnectedness of global finance, it is that the authorities, particularly in Britain and America, have lost control and do not have the means to regain it as quickly as we might hope. With an oil price approaching $100 a barrel, we are in an uncharted and dangerous place.
After more than 15 years of extraordinarily benevolent economic conditions worldwide - cheap oil, cheap money, growing trade, the Asia boom, rising house prices - things are unravelling at bewildering speed. The system might be able to handle one shock; it is undoubtedly too fragile to handle so many simultaneously.

The epicentre is the hegemonic London and New York financial system. No longer are these discrete financial markets; financial deregulation and the global ambitions of American and European banks have made them intertwined. They are one system that operates around the same principles, copying each other's methods, making the same mistakes and exposing themselves to each other's risks. Thus the collapse of the American housing market, the explosive growth of American home repossessions and the discovery that 'structured investment vehicles' (SIVs), the toxic newfangled financial instruments that own as much as $350bn of valueless mortgages, are not American problems. They are ours too.

The recent departure of the CEOs of two of the biggest investment banks - UBS and Merrill Lynch - after unexpected losses and loan write-offs running into many billions of dollars is not just an American problem, it's ours. It is also our problem that Credit Suisse last week announced more billions of write-offs, and Citigroup was rumoured to be following suit with even bigger losses. When banks take hits as big as this, it hurts their capacity to lend, because prudence demands they have up to eight dollars or pounds of their own capital to support every hundred dollars or pounds that they lend. If they don't, they have to lend less - and that is called a credit crunch.

This crunch is already upon us - hence the massive selling of bank shares at the end of last week and the extraordinary news that the taxpayer, one way or another, now has supplied £40bn to the stricken mortgage lender Northern Rock, a sum that could climb to £50bn by Christmas. Stunningly, that represents 5 per cent of GDP. The bank got into trouble because it thought, under the chairmanship of free-market fundamentalist Viscount Ridley, that it could escape trivial matters like having savers' deposits to finance its adventurous lending. Instead, it could copy the Americans and sell SIVs to banks in London - most of them the same banks that bought from New York - and it could steal a march on its competitors.

But in the London/New York financial system, when things went wrong in the US they immediately went wrong for Northern Rock in Britain. The banks announcing those epic write-offs no longer wanted to buy Northern Rock's loans - and neither did anybody else. The Bank and Treasury hoped to get by with masterly inactivity, but instead, as we know, there was a run on the bank. The government had to step in by guaranteeing £20bn of small savers' deposits - but also, we now learn, by supplying £30bn of finance that the financial system will no longer supply itself.

This is testimony to the degree of fear that characterises today's credit crunch - and it bodes ill. What is worse, the Ridleyite maxims that got Northern Rock into trouble have also disabled the rescue, protracting rather than limiting the crisis.

What should have happened, of course, is that when the Bank of England found that it could not find a secret buyer for Northern Rock in the summer, it should have done what it did in the 1974 secondary banking crisis. It should have taken Northern Rock into the Bank of England's ownership. Individual depositors and the City institutions alike would have been quickly reassured, and when the crisis passed the bank could have been sold back into the private sector.

But in 2007, the Ridley view of how to run a bank is also the authorities' view of how to respond to a crisis. There is a prohibition on even short-term public ownership. In a free-market fundamentalist world, this, like regulation, is regarded as wrong. Instead, the most expensive and riskier route has been taken so that Northern Rock remains part of the problem rather than the solution.

For when a central bank supplies rescue finance on this epic scale, it has wider implications. In effect it is printing money to bail out Northern Rock; good for the financial system, but bad for the rest of us because it will make it harder for the Bank to cut interest rates. Already the British property market is in trouble. Given the absurd prices it is all too possible that we could follow the American market, with huge bad debts and mortgage repossessions. The way Northern Rock has been rescued will make it hard for the Bank to cut interest rates and revive the property market, while remaining wedded to its inflation target. And if there are more Northern Rocks rescued in the same way, the dilemma will get worse.

Last week David Cameron proudly pronounced that the Tories were winning the battle of ideas. He could not be more wrong. The credit crunch is testimony to the exhaustion of a conservative free-market world-view. To get through this crisis, the American and British governments are going to have to think what hitherto has been unthinkable. Already the Americans are cutting interest rates careless of the inflationary consequences. Britain may have to follow suit. Both governments will have to devise new forms of regulation and control. Banks may have to be taken into public ownership.

For 30 years we have been suckered into thinking that public authority has no business intervening in the wealth-generating, free-market financial system. This is the year when reality resurfaced with a vengeance.

http://politics.guardian.co.uk/colum...205122,00.html

Since 2 years I am claiming that global crash is coming. Will I have right soon?

[Manchester Planner]

...says The Observer...

[wjfox]

Charles Prince, the chairman and chief executive of the world's biggest bank, Citigroup, has resigned -

http://news.bbc.co.uk/1/hi/business/7078251.stm

[gothicform]

haha and to thikn a few months ago citi were poking around hoping to buy barclays

"When you look at the trillions of dollars in assets that Citi has and you're talking about potential exposure of maybe $15bn: it's bad but it's not the end of the world," said Bill Smith from Smith Asset Management in New York.

"The actual structure of Citigroup is broken - it's too big, it's too bloated and we think it should be broken up into three of four pieces," he added.

i cant believe how bad its got in the usa though. if you read this its pretty clear some lenders WANT the property
http://news.bbc.co.uk/1/hi/business/7070935.stm

[C-Beam]

The worst it yet to come:

[Zim Flyer]

I went for a walk yesterday and went past all these poncy new flats (sorry bullshit apartments) and they were plastered with for sale signs and to let signs and I took this picture:



Bring on the crash especially for the BTL scum lords.

[mexico86]

I figure that the worst of the subprime debacle is just about over - by the time WE see the full picture, it is old news ... I imagine steps have already been taken by those in charge throughout the economy to correct things.

Maybe there will be more shit hitting the fan, perhaps credit card debts going bad, but then there always is near the end of a long period of inflation/growth.